Chapter 03 · Section I · 14 min read
Odds and probability
The vocabulary you need before any of the rest of this chapter makes sense — and the most common ways probability is misread in policy.
Probability is the language of uncertain things. When Khalti’s fraud system says a transaction has a 73% probability of being fraudulent, it is saying: of all the transactions historically that looked very similar to this one, 73 in 100 were fraud.
That is a careful claim. It is not a claim about this specific transaction. It is a claim about a class of similar transactions. Treating a probability as a verdict — “the model says it’s fraud, block it” — confuses these two things, and is a major source of harm in deployed AI.
This section is a stub. The full version will cover odds vs. probability, conditional probability, and the most common misreadings you’ll see in newspapers.